Will the New USPTO Administrative Proceedings Solve the Software Patent Problem?

Amidst current discussions on the “problem” posed by software patents, David Kappos, Director of the United States Patent and Trademark Office (USPTO), recently delivered a speech defending the existence of such patents. Kappos argued that innovations in the software industry are no less worthy of patent protection compared to other inventions, and that the America Invents Act (AIA) has introduced administrative proceedings in the USPTO that will increase the quality of patents by weeding out overly broad ones that give monopolies to unworthy inventions.

The AIA introduced five administrative proceedings, giving authority to the newly established Patent Trial and Appeal Board (PTAB) in the USPTO to determine the validity of patents. These proceedings are: (1) post-grant review; (2) inter partes review; (3) transitional post-grant review for business method patents; (4) supplemental examination; and (5) derivation proceedings. Inter partes reviews replace the procedure of inter partes reexamination, while ex parte reexaminations are still in place and run parallel to these new proceedings. Among these, the first three types are of particular importance because they allow third parties to submit prior art. Accordingly to Director Kappos, for software patents, much of the prior art is “in the form of previously written software, which is difficult to find and more difficult to understand,” and “shifting terminology results in near-endless synonyms that frustrate even the most diligent searcher.” Thus, having such administrative proceedings allows those who have the incentive and resources––often competitors to the patent holder––to find and submit prior art. This blog post provides a basic overview of these three types of proceedings, examining whether they will contribute to solving the software patent problem.

Post-Grant Reviews

Through a post-grant review, anyone can challenge the validity of a patent within nine month of its issuance or reissuance. The challenger––“petitioner”––submits a request to cancel as unpatentable one or more claims of a patent on any ground that could be raised. This is in contrast to this proceeding’s predecessor, ex parte reexamination, where patents could only be challenged by prior art in the form of other patents and printed publications. Once a request is submitted by a petitioner, the patent owner has two month to respond and set forth the reason why such a review should not be started by the PTAB. The PTAB has three months after the patent owner’s response to decided whether to institute the proceeding, using the standard of whether “it is more likely than not that at least [one] of the claims challenged in the petition is unpatentable” or whether “the petition raises a novel or unsettled legal question that is important to other patents or patent applications” to make such a determination.

After the review is initiated, the PTAB will issue a scheduling order, specifying times for the various phases of the trial. The review is statutorily mandated to conclude quickly––within one year from its commencement, or within one year and six months if the director can show sufficient cause. Once done, the review outcome is appealable to the Court of Appeals for the Federal Circuit. Upon conclusion of all the administrative and judicial proceedings, the petitioner is estopped from challenging any claim that was finally adjudicated based on any ground that was raised or reasonably could have been raised. This estoppel applies not only in future USPTO and court proceedings, but also in the U.S. International Trade Commission (ITC), a very important venue in many high-tech litigations because of its power to block infringing products into the country.

Inter-Partes Reviews

Inter partes reviews were designed to dovetail with the post-grant review, so a request for one can only be filed after the post-grant review period has ended or after a post-grant review is completed. Such a proceeding is similar to current reexamination proceedings in that only patents and printed publications can be cited as a basis for review. This relatively limited scope encourages third parties who believe a patent is defective to make their voices heard in the early days after patent issuance, to use post-grant reviews which allow a broad number of grounds upon which a patent can be invalidated.

When determining whether to initiate an inter partes review, the standard used by the PTAB is whether there is “reasonable likelihood that at least one of the claims challenged in the petition is unpatentable,” a standard less stringent than those for post-grant reviews. As for estoppel, a requestor who fails to invalidate a patent through an inter partes review cannot file another administrative proceeding or any other proceeding in the districts courts or the ITC on any ground that the petitioner raised or reasonably could have raised during that inter partes review.

Transitional Post-Grant Reviews for Business Method Patents

Transitional post-grant reviews for business method patents allow a party who has been sued or threatened with suit based on a financial business method patent to challenge the validity of the patent. Such proceedings cover methods or corresponding apparatuses for performing data processing or other operations used in the practice, administration, or management of a financial product or service, but not inventions that contain a technological feature that is novel and non-obvious over the prior art and solve a technical problem using a technical solution.

While post-grant reviews can be used for any basis upon which a patent can be found invalid and inter partes reviews may address only issues of novelty and obviousness based on patents and printed publications, post-grant reviews for business method patents lie the middle and may only be instituted based on patentable subject matter, novelty, non-obviousness, and disclosure and enablement requirements. Similar to inter partes review, requests for post-grant reviews for business method patents must wait until the period that a post-grant review could be instituted is over. As for estoppel, the petitioner is estopped from raising only issues that were actually raised.

Conclusion

As a rebuttal against commentators who believe that the patent system is broken, Director Kappos expressed enthusiasm about the new proceedings implemented by the AIA. Director Kappos stated that we should “give the AIA a chance to work” before prematurely criticizing the system. While it remains to be seen how these new rules will actually play out and affect the software industry, there is perhaps reason to be optimistic that Kappos is correct that new proceedings found within the AIA will increase the quality of software patents. The question remains whether this will truly be enough to solve the software patent “problem.”

Cite as: Michael Liu Su, Will the New USPTO Administrative Proceedings Solve the Software Patent Problem?, Berkeley Tech. L.J. Bolt (December 5, 2012), http://btlj.org/?p=2161.
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